Your Questions About Money Making Stocks For 2011

Steven asks…

How should I feel to earn more in one day than I earn working all year?

On Thursday I bought 4,000 shares of a stock just before earnings were released. I felt the stock would go up and it did by 7 points. I earn less than $10 an hour at my job so I earned more in one day than I make all year. Before this big gain in a stock I made $7,000 by trading stocks and lost $10,000 in year 2011. I can tell I lose money by spending my time at the job when I miss the right times to buy and sell stocks since I am working and can’t tell what is happening in the market. How should I feel to earn more in one day than I earn all year and does it sound like it is even worthwhile for me to hold onto my boring and low paying job?

John answers:

Thomas, No. Keep working! What you are doing is “gambling”… Not investing! You got very lucky on the last one. Your stock could have just as easily lost 7 points that day. The stock market is a very unsure, undependable thing at any point in time, in the short term or longer. Remember, you’re going to have to pay somewhere around 25-30 % percent of any realized gains in taxes.

Lisa asks…

Wouldn’t it be smarter if Democrats cut government programs instead of creating new ones?

House Ways and Means Chairman Charlie Rangel (D., N.Y.) is a powerful man. When he makes the rules, Congress usually sticks to them.

Those rules now include “Pay-Go,” short for “pay-as-you-go.” This is something Democrats promised last year in their successful campaign to retake the Congress. The idea is that every increase in entitlement spending and every cut in taxes must be offset by a spending cut or a tax increase. Congress already spends lots of money it doesn’t have, but the concept here is that they can’t spend additional money they don’t have unless they can find additional revenue or savings somewhere else.

We’re seeing now what that means for fixing the Alternative Minimum Tax. In order to prevent this “tax on the wealthiest” from ensnaring 23 million American families, Pay-Go would force Democrats to raise other taxes to make up for the “lost” revenue.

But what if Rangel were to propose a tax increase that will actually reduce federal revenue? Would that tax increase still count as an offset against the future social spending programs that Democrats envision?

The answer is yes, and it isn’t a theoretical question. As part of his so-called “Mother of All Tax Increases” (H.R. 3970), Rangel would hike the capital gains tax rate by 63 percent. This will severely depress financial markets and almost certainly lose money for the government at the same time. And because Congress’s Joint Tax Committee and the Congressional Budget Office do not consider how taxes affect human behavior, it will count this tax increase as a positive instead of a negative.

The capital gains tax applies to earnings from the sale of investments that appreciate in price. When you buy a stock at $1, for example, and sell it a year later for $10, you pay this tax on your $9 gain. Rangel wants to boost that tax immediately from 15 percent to 19.6 percent, and then let it rise by five more points in 2011, when President Bush’s tax cuts expire.

The capital gains tax has a very direct effect on investors’ decisions because it hits so near to their activity in the market. It represents an extra transaction cost for each profitable sale of an investment. If it is very high, the tax tends to discourage investors from swapping out of mediocre investments into better ones unless they are guaranteed a very high return in advance. It distorts the markets by making tax-exempt bonds appear to be a more attractive investment than they would be otherwise.

This is not just theory — it has been demonstrated conclusively each time the capital gains tax has been raised or lowered. The capital gains tax offers uncontroversial proof that incentives really do matter in tax policy — a staple of supply-side thinking. For thirty years, each time the capital gains tax has been cut, its revenues have increased as investors have taken the opportunity to buy and sell more freely. When it has been raised, revenues have declined.

By 2011, Democrats plan to raise the capital gains rate from 15 percent to 24.6 percent. That would represent a 63-percent increase on the tax cost of every investment transaction — definitely large enough to begin affecting the decisions of the large financial institutions that control most of the stocks bought and sold each day. This could crush shareholder value for everyone — including the little guy. In some cases, it will encourage investors to stick with mediocre investments when their money could be getting more return and contributing more to the economy elsewhere.

Historically, capital-gains-tax hikes have meant less in tax collections, and less revenue for the government. Yet because they use what is called “static analysis,” Rangel’s congressional accountants will certify — contrary to fact — that a 63-percent increase in the capital-gains rate will translate to a corresponding increase in capital gains revenues.

The tax hike will also hurt a lot of people. It would be easy to dismiss a capital-gains-tax hike as something that only affects the wealthy, but this is false in a day when 92 million Americans’ financial fortunes and retirement plans are tied to the stock market, and millions more own investment properties.

Rangel’s tax hike, along with a much-feared pick-up of inflation, could constitute a one-two punch to your financial gut. The U.S. Department of the Treasury does not collect the capital-gains tax based on an investment’s inflation-adjusted or “real” value — you have to pay taxes on the inflation, too. Let’s say your $10,000 investment from 2000 only kept pace with inflation and was worth $11,708 in 2006. If you sold it at that price, you still paid taxes on that false “gain.” Under current law, the tax bill would have been $265. Rangel’s tax hike, once both stages are complete, would make you pay $420 just to recover your own money.

This is what “Pay-Go” means for you. Whether you have an IRA, a 401(k) or a little account on TD Ameritrade, you are going to lose a lot of money so that Democrats can balance congressional revenue and spending at the bottom of a blank page full of false information.

John answers:

Liberals will never cut a government program.

They believe all the money you have is theirs, free to spend as they wish.

Any money you have left over is their gift to you.

Richard asks…

What are your thoughts on this?

Taxation: Three great waves …. A must read, this is not bashing, it’s the
facts of one of Obama’s “changes”…….


In just six months, on January 1, 2011, the largest tax hikes in the history
of America will take effect.

They will hit families and small businesses in three great waves.

On January 1, 2011, here’s what happens… (read it to the end, so you see
all three waves)…

First Wave:

Expiration of 2001 and 2003 Tax Relief

In 2001 and 2003, the GOP Congress enacted several tax cuts for investors,
small business owners, and families.

These will all expire on January 1, 2011.

Personal income tax rates will rise.

The top income tax rate will rise from 35 to 39.6 percent (this is also the
rate at which two-thirds of small business profits are taxed).

The lowest rate will rise from 10 to 15 percent.

All the rates in between will also rise.

Itemized deductions and personal exemptions will again phase out, which has
the same mathematical effect as higher marginal tax rates.

The full list of marginal rate hikes is below:

* The 10% bracket rises to an expanded 15%
* The 25% bracket rises to 28%
* The 28% bracket rises to 31%
* The 33% bracket rises to 36%
* The 35% bracket rises to 39.6%

Higher taxes on marriage and family.

The “marriage penalty” (narrower tax brackets for married couples) will
return from the first dollar of income.

The child tax credit will be cut in half from $1000 to $500 per child.

The standard deduction will no longer be doubled for married couples
relative to the single level.

The dependent care and adoption tax credits will be cut.

The return of the Death Tax.

This year only, there is no death tax. (It’s a quirk!) For those dying on
or after January 1, 2011, there is a 55 percent
top death tax rate on estates over $1 million. A person leaving behind two
homes, a business, a retirement account, could easily pass along a death tax
bill to their loved ones. Think of the farmers who don’t make much money,
but their land, which they purchased years ago with after-tax dollars, is
now worth a lot of money. Their children will have to sell the farm, which
may be their livelihood, just to pay the estate tax if they don’t have the
cash sitting around to pay the tax. Think about your own family’s assets.
Maybe your family owns real estate, or a business that doesn’t make much
money, but the building and equipment are worth $1 million. Upon their
death, you can inherit the $1 million business tax free, but if they own a
home, stock, cash worth $500K on top of the $1 million business, then you
will owe the government $275,000 cash! That’s 55% of the value of the
assets over $1 million! Do you have that kind of cash sitting around
waiting to pay the estate tax?

Higher tax rates on savers and investors.

The capital gains tax will rise from 15 percent this year to 20 percent in

The dividends tax will rise from 15 percent this year to 39.6 percent in

These rates will rise another 3.8 percent in 2013.

Second Wave:


There are over twenty new or higher taxes in Obamacare. Several will first
go into effect on January 1, 2011. They include:

The “Medicine Cabinet Tax”

Thanks to Obamacare, Americans will no longer be able to use health savings
account (HSA), flexible spending account (FSA), or health reimbursement
(HRA) pre-tax dollars to purchase non-prescription, over-the-counter
medicines (except insulin).

The “Special Needs Kids Tax”

This provision of Obamacare imposes a cap on flexible spending accounts
(FSAs) of $2500 (Currently, there is no federal government limit). There is
one group of FSA owners for whom this new cap will be particularly cruel and
onerous: parents of special needs children.

There are thousands of families with special needs children in the United
States , and many of them use FSAs to pay for special needs education.

Tuition rates at one leading school that teaches special needs children in
Washington , D.C. ( National Child Research Center ) can easily exceed
$14,000 per year.

Under tax rules, FSA dollars can not be used to pay for this type of special
needs education.

The HSA (Health Savings Account) Withdrawal Tax Hike.

This provision of Obamacare increases the additional tax on non-medical
early withdrawals from an HSA from 10 to 20 percent, disadvantaging them
relative to IRAs and other tax-advantaged accounts, which remain at 10

Third Wave:

The Alternative Minimum Tax (AMT) and Employer Tax Hikes

When Americans prepare to file their tax returns in January of 201

John answers:

I work for an FSA Administrator. I’ve seen you post this same question multiple times before, because I look for questions that contain FSA or Flexible Spending in them.

It is clear that you are not asking a question here, but you are using Yahoo! Answers to make a political statement. That clearly violates the terms and conditions of Yahoo! Answers.

If you want to rant, please find a forum or blog where that would be more appropriate.

Donald asks…

Need some advice/help?

I own shares of SIRI and currently I am down 9% (as of last week I was up). I’m contemplating selling next week and buying a “healthier” stock. I have faith that Sirius XM will go up but I feel like there are better safer options out there. I think its reasonable that they make it to $2.00 buy the end of the year but then again I have some doubt. What is your opinion/target of SIRI? Do you recommend me selling at a loss? Also any other attractive stocks that you may want to throw out there will be appreciated, I love researching new companies.

Btw, My goal is to sell in February 2011. I have other money invested for long term but I need this particular money short term.

John answers:

Any money you need in three months should be in the bank. You are gambling, not investing if you use short term funds to try to increase your capital.

Thomas asks…

Is this what Banks have taken away as a lesson from being bailed out? New ways to take more?

Say you find yourself losing billions of dollars as your chief rivals – even Citi, for crying out loud — make good money. How do you explain yourself?

If you’re Bank of America (BAC), you write off your latest pathetic performance as “a unique and critical transition year for the company.” Then you return to business as usual and hand out million-dollar bonuses like they’re Necco Sweethearts.

This is how BofA’s chief executive, Brian Moynihan, came to get a $10 million pay package for 2011, comprising $950,000 in salary and the rest in restricted stock. His top aides, Charles Noski and Joe Price, will each get $5.7 million, mostly in stock.

Thanks Obama!

John answers:

If you, others & companies don’t what these banks are doing, you ARE FREE to take your business elsewhere.

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